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G20 to warn of region ‘conflicts’ as global challenge

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Brazil took over the rotating presidency of the G20 from India on December 1

Group of 20 finance leaders are expected to say the global economy continues to face multiple challenges including “conflicts in many regions” and geoeconomic tensions, according to a draft version of the communique seen by Reuters.

The draft communique also said the likelihood of a soft landing in the global economy has increased, but uncertainty remains high.

“Risks to the global economic outlook are more balanced,” with faster-than-expected disinflation and more growth-friendly fiscal consolidation underpinning growth, the draft said.

“Among the downside risks to the global economy are [wars and] escalating conflicts, geoeconomic fragmentation, rising protectionism and trade routes disruptions,” the draft communique said.

The placement of the words “wars and” in brackets suggests there was no consensus yet within the group on whether to include the language in the final version.

With their countries deeply divided over Israel‘s attacks on Gaza, finance officials from the G20 major economies are poised to set aside geopolitics and focus on global economic issues as they gather in Sao Paulo, Brazil this week.

The South American country is the current G20 president.

Brazil’s coordinator of the finance track at G20, Tatiana Rosito, said on Tuesday that the group is moving towards a short communique that reflects Brazilian priorities.

Rosito, the International Affairs secretary at the Finance Ministry, also told a briefing there was no concrete proposal on the table for debt negotiation, adding that the idea is to create “a new momentum” to advance the issue, also including the discussion of preventive mechanisms.

Finance officials and central bankers from the G20 are meeting to review global economic developments at a time of slowing growth, the increasing strains of record debt burdens, and worries that inflation may not yet be tamed.

In the draft communique, the G20 finance leaders gave an optimistic view on the price outlook. Inflation has receded in most economies, they said, thanks in part to “appropriate” monetary policies, easing supply chain bottlenecks and moderating commodity prices.

The priority for central banks is still to ensure that inflation converges to target “in line with their respective mandates,” the draft communique said.

The draft also said the G20 group reaffirms their existing exchange-rate commitment, which warns against excess volatility and volatile currency moves as undesirable for economic growth.

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